ACCA I Advanced Financial Management (AFM) I Hedging Interest Rate Risk - AFM Lecture 10

[@NabeelAhmed-xl8rm]

i am self studying student appearing for AFM in 2 weeks and this illecture really helped my problems in the kit and wiht the topic, thankyou miss

[@johire8085]

do you pass in the exams

[@Aye--.--]

1:38:56 why is exercise price 92 chosen even though exercise price 93 would give a lower interest rate?

[@dabba9998]

Even I have the same doubt

[@Aye--.--]

​@@dabba9998 I did both currency and interest rate hedging chapters in BPP Workbook. In interest rate hedging, it seems that some people choose the exercise price that is closest to current base rate(also known as SOFR rate in this e.g.). Perhaps that's why? Current base rate is 8%, and exercise price 92 means 8%, too. Btw, interest rate calculations in BPP workbook are so much more easier. Ticks not needed. They calculate in % only and compare the result. Check it out if u can!

[@enlightenmentruby5214]

bcz the sofr is 8%. 100 - 92 = 8. i think this is why

[@MilesandMoneyMatters]

Excellent lecture. Thank you

[@craigvaz553]

1:47:11 Wont it be -0.05, instead of plus, im not very clear on that step, can you please explain it once again

[@AustinDustbin]

we have to pay 0.2 premium and we will receive 0.15 premium. The net premium we have to pay is 0.05. Since this is a borrowing, a premium would increase the amount we have to pay, hence leading to a rise in the effective interest rate. Thus we add it.

[@kadz2774]

@@AustinDustbin thank you for this explanation

[@vighneshnayak663]

1:17:20 starting in 4 months time on august 1 , should we assume that every contract has starting date from january?

[@ankeetsitoula1857]

studying one day before exam

[@caasifsafder3403]

best lectures delivered by you

[@AbdulHaseeb-yh4dy]

Mam please answer, can we calculate gain loss in hedging without ticks as it is confusing .gain loss can be easily calculated without it

[@jumananazrin904]

I too have the same doubt

[@shamimiqbal7341]

I like your lecture.

[@randomguy4039]

Hey.. Hopefully ill get a reply. But for collars, I see we found the effective rate of interest.. In the exam, can I calculate the effective rate of interest for Options and futures as well, to find the net amouh payable? Or will i lose marks?

[@randomguy4039]

And the same can be done with hedging exchange rates... God I hope you reply

[@blackm9063]

Thank you Mam

[@mohamednazir6939]

Superb

[@judithtibanywana5102]

Nice❤

[@AustinDustbin]

Interest Rate Swap😭😭

[@sarthakshinde3606]

Jai shree ram